BioMarin Pharmaceutical Inc (BMRN) 2013 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for your patience. You have joined BioMarin Pharmaceutical Incorporated second-quarter 2013 financial results conference call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will be given at that time.

(Operator Instructions)

As a reminder, this conferences may be recorded. I would now like to turn the call over to your host, Eugenia Shen, Investor Relations. Ma'am, you may begin.

Thank you. On the call today is JJ Bienaime, BioMarin's CEO; Dan Spiegelman, CFO; Hank Fuchs, Chief Medical Officer; Jeff Ajer, Chief Commercial Officer; and Robert Baffi, Executive Vice President of Technical Operations. This non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development.

Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market, and developments by competitors, and those factors detailed in BioMarin's filings with the Securities and Exchange Commission such as 10-Q, 10-K and 8-K reports. Now I'd like to turn the call over to JJ, BioMarin's CEO.

Thank you, Eugenia. Good afternoon and thank you for joining us on today's call. In the second quarter we continued to make progress as we head into the second half of the year. Our commercial business continued to perform well with double-digit growth in product sales for all our products, the three products that we commercialize and the royalties we earned from Genzyme for Aldurazyme. In addition, we remain focused on executing on our development goals and advancing pipeline programs, all leading up to the potential approval and launch of Vimizim in the first quarter of next year.

I am please with the Company's momentum, particularly with the pace at which we are developing first in class or best in class therapies and with the pace at which we are building our market for our existing products portfolio. Starting with the commercial business, all four products contributed to the 10% year-over-year increasing of total revenues. This stated rate of growth continues to strengthen the foundation of the Company and helps fund the development of our R&D programs. In addition, our commercial presence spans over 40 countries worldwide and is highly leverageable for several pipeline programs including Vimizim and PEG-PAL.

As for the development side, we continue to invest in our pipeline to generate value for both the Company and our shareholders and we are working toward delivering life altering treatments for patients suffering from rare genetic diseases worldwide. By year end, in addition to prosecuting approval applications for Vimizim, we will have five other programs in clinical development including three programs in Phase 3 trials.

During the quarter, we have made good progress on the Vimizim regulatory front globally. We received prior to review status from the FDA and PDUFA data February 28, 2014. The EMA has validated the Vimizim MAA and has granted accelerated review status, which could lead to a CHMP opinion before the end of the year and during Q2 we also submitted a marketing application in Brazil for Vimizim. In terms of other highlights of the second quarter, we initiated the Phase 3 PEG-PAL trial for PKU. We also presented interim data from the Phase 1-2 trial for our PARP inhibitor, BMN 673 at the annual ASCO meeting.

Based on these encouraging data, we announced our plans to initiate a Phase 3 trial in BRCA breast cancer patients which we now expect to do in the current quarter. Since ASCO, the data on 673 has continued to improve and Hank will have some more recent data to share on this ongoing study a little later. In addition to maturing and improving data from our ongoing BRCA breast study based on increasing response rates we are seeing and the growing interest from key opinion leaders in earlier reviews as an alternative to chemotherapy, we are now exploring the possibility of a neoadjuvant study.

This is a testament to the potential of PARP inhibitor as front line therapy and also bodes well for the commercial opportunity of 673. Of the approximate 225,000 newly diagnosed breast cancer cases in each year in the US alone, roughly 5% to 8% or 12,000 to 18,000 cases are germline BRCA mutated. Being able to use BMN 673 as front line therapy in breast cancer patients represents a larger market opportunity than originally anticipated, though it is still orphaned. We have many important milestones ahead this year including Phase 3 trial initiations for BMN 701 for Pompe Disease and BMN 673 for BRCA breast cancer, all leading up to an expected approval of Vimizim in February of next year.

Next Dan Spiegelman will review the financials for the second quarter. Jeff Ajer will then provide more detail on our commercial portfolio, and Hank Fuchs will provide an update on our R&D before we open the call for questions. Now I would like to turn the call over to Dan.

Thanks, JJ. Earlier today we issued a press release summarizing our financial results for the second quarter and first half of the year, and I refer you to that release for the full details. Following are some key highlights. Revenues of our existing commercial products continued to grow nicely with a 10.3% increase in total revenue in the second quarter of 2013 compared to the second quarter of 2012. This result was driven by double-digit growth in sales of all three of our major products, an 11.1% increase on Aldurazyme net product revenue, a 17.9% increase in Kuvan net product revenue and a 15.2% increase in Aldurazyme royalty revenue.

As we have discussed previously, Aldurazyme net product revenue recorded, which was $17.5 million in the quarter, consists of both Aldurazyme revenue royalty -- the royalty earned on Genzyme's product sales of Aldurazyme in the quarter, and net product transfer revenues which was a negative $3.7 million in the quarter. This negative product transfer revenue is due to differences in the timing of our product shipments to Genzyme and their ultimate sale to patients, and is not reflective of product demand which is best measured by the royalty revenue we earn.

One measure of the total growth in demand for our product is to look at total revenues excluding these net product transfer revenues, which increased by 16.5% this quarter year-over-year. For the first six months of the year total revenue, excluding effective Aldurazyme product transfer revenue, increased 11.2% for an annualized rate of over 20%. Based on these growth rates, we remain on track for our full year revenue guidance of between $530 million and $550 million.

Operating expenses for the quarter were in line with our prior guidance and consistent with the growth in our product portfolio and commercial operations. Though revenues in the second quarter grew faster than expenses, resulting in a GAAP net loss of $21.5 million versus a loss of $32 million in the second quarter of 2012. Non-GAAP adjusted EBITDA, which we believe reflects the best measure of our operating results because it excludes major non-cash expenses such as stock compensation, as well as extraordinary items, was breakeven for the quarter. Consistent with our breakeven adjusted EBITDA quarter, our cash balance was essentially unchanged from the prior quarter and we ended the second quarter with cash, cash equivalents and short and long term investments of $524.4 million.

Turning now to guidance for the full year of 2013, we are reaffirming our revenue and R&D spend guidance for the year by bringing down slightly our projected SG&A expenses and consequently reducing our full year projected net loss. As previously noted, we are reaffirming our revenue guidance. Similarly, R&D expense guidance is unchanged, though we expect R&D expenses to accelerate substantially in the second half of the year as multiple Phase 3 programs start to ramp up. Our PEG-PAL Phase 3 initiated in the second quarter will be in full swing for the second half of the year.

In addition, our 673 Phase 3 is ramping up and, as JJ mentioned, is expected to start at the end of the third quarter. The 701 Phase 3 is planning for a year end start and, as Hank will describe in more detail, we have already been producing material for that study. Finally, we are getting ready to initiate studies in our achondroplasia and Batten disease programs as well. All these study starts lead to a projected R&D spending increase in the [second] half of 2013, contributing to full year guidance of between $340 million and $380 million from a first half actual of $169.4 million.

On the SG&A side, preparation for Vimizim launch continues which leads to some limiting hiring and additional marketing spend in the second half of the year. However, we are lowering our SG&A guidance from $220 million to $250 million for the full year, slightly to $220 million to $240 million. Similarly, we are improving guidance for our full year loss by $10 million, dropping the range from $170 million to $195 million, down to $160 million to $185 million. And there is a corresponding improvement in adjusted EBITDA, our measure of operating performance, to a loss of between $40 million and $65 million. Now I will like to turn the call over to Jeff who will provide an update on our commercial program.

Thanks, Dan. Starting with Naglazyme, Q2 2013 sales of $69.9 million increased 11.1% over Q2 2012 sales, and sales in the first half of 2013 are up 5.9% over sales in the first half of 2012. These figures are roughly in line with growth of the underlying business defined as patients on Naglazyme. We believe that this growth rate is sustainable driven by a base of patients that are doing well on Naglazyme and a high level of disease awareness that results in new patients being diagnosed and referred for therapy each quarter.

Later this year we look forward to the resurvey study which is a 10-year follow up from the original MPS6 survey study. This long term follow up will contribute valuable information regarding the natural history of MPS6, including the impact of Naglazyme ERT. A poster will be presented at the International Congress of Inborn Errors of Metabolism, ICIEM, Meeting and publication in a peer reviewed journal will follow.

Moving onto Aldurazyme, sales continue to grow at healthy rates. Total sales reported by Genzyme in the second quarter of 2013 increased 17% over the prior year quarter. As for Kuvan, sales of $40.9 million in the second quarter of 2013 increased by 17.9% over the prior year quarter. The underlying driver of Kuvan growth is new patients on therapy, although revenue growth exceeded patient growth. The primary reason for this is that new patients are predominantly adult patients relative to the existing patients. Because Kuvan is dosed based on weight, growth from the adult patient segment has a slightly higher impact on sales than on the actual number of patients. There are several potentially material positive forces for our Kuvan business going forward, one of which is the PKU-016 ASCEND study. Study results evaluating Neuropsychiatric outcomes will be presented at the ICIEM meeting and will be submitted for publication in a peer reviewed journal.

Turning now to Vimizim, patient mapping efforts continue. The numbers are increasing slowly and steadily, largely as a result of new patients being recorded by our current customer base of geneticists and metabolic specialists. Morquio patients identified to date number well over 1,300. We expect patient identification to continue between now and launch. We have made quite an effort and will continue to expand our reach to new call points, mainly skeletal dysplasia specialists and orthopaedists. This is and will continue to pay off with additional incremental increases.

Other launch preparations continue. We're planning to launch in the US and EU in Q1 2014 but we'll be ready to launch in the US in late Q4 2013 in case the action date moves up. The US early access program is active with a small number of patients enrolled. We have applied for the French and Italian early access programs and, if approved, we could start generating our first commercial revenues in one or both of these countries in the fourth quarter of this year.

As for upcoming meetings, an international Morquio expert meeting will take place later this month in Amsterdam with a smaller follow up meeting to take place the following month in Barcelona tied to ICIEM. The objective of these two meetings is to facilitate the development and publication of expert treatment guidelines for Morquio, which could be published shortly following the initial launches. Now I will turn the call over to Hank Fuchs who will review the pipeline.

Thanks, Jeff. Starting with Vimizim for MPS IVA, we made great strides in the regulatory front during the second quarter. We received priority review status from the FDA with a PDUFA date set for February 28, 2014. The FDA appears to be fully engaged with reviews and inspections underway. The advisory committee meeting date has not yet been set but we expect it to be sometime this year. During the quarter we also received validation of the Vimizim MAA market authorization implication from the European Medicines Agency with a potential CHMP opinion in November or December 2013 if we remain on the accelerated review status. We also recently submitted the marketing application in Brazil, an important milestone in the worldwide regulatory process, especially as Brazil, along with the United States, are expected to be the largest market opportunities for Vimizim.

Adequate quantities of Vimizim have been produced and are available to support initial launch. Ongoing production of both drug substance and drug product will allow for a robust global launch quickly following approvals in multiple countries. Adequate manufacturing capacity exists to support Vimizim, Naglazyme and Aldurazyme in our currently licensed facility. Significant progress is being made in preparation of our Shanbally facility to add additional capacity to augment our production capabilities and to initially license the facility for product testing and release. Both the FDA and EMA have conducted or scheduled pre-approval inspections associated with the review of the marketing applications. Based on the feedback to date from agencies, we believe that the inspections and review are going well and should not negatively impact the timing of the approval decisions.

Moving onto BMN 673 for genetically defined cancers, as of July 24, the resist response rate from the ongoing trial is 9 out of 18 breast cancer patients -- or 50% including one confirmed complete response. This response rate includes confirmation of the three responses presented at the last ASCO meeting and two new additional patients who are yet to be confirmed. Four patients are ongoing with stable disease and with the potential for additional responses. The study is still ongoing and the Company will provide additional updates later this year, including data in ovarian cancer, Ewing sarcoma and small cell lung cancer. BioMarin now expects to initiate a Phase 3 trial for BMN 673 in deleterious germ line BRCA mutation metastatic breast cancer in late third quarter of 2013, earlier than previously announced at the ASCO annual meeting in early June.

We are encouraged by a few program developments since the ASCO meeting in early June. We have completed discussions with regulatory authorities with the following favorable outcomes. We have confirmed progression free survival can serve as the primary end point in the Phase 3 trial. We have confirmed use in early line patients and we have confirmed that we can make a direct comparison to chemotherapy to support registration. Based on this and other positive interactions with opinion leaders, we are exploring the possibility of a neoadjuvant study.

As we announced today, we are very pleased by the support of the National Breast Cancer Coalition led by its well regarded president, Fran Visco. National Breast Cancer Coalition has indicated it will partner with BioMarin on trial enrollment initiatives globally and serve as a resource on study design, implementation and execution. We're excited to work with this world class organization on the execution of our Phase 3 program. Relevant medical meetings to note for the PARP inhibitor program include the San Antonio Breast Cancer Symposium in December and possibly the European Society of Medical Oncology meeting in late September in Amsterdam.

Now turning to BMN 111 for achondroplasia. As announced today, we are modifying our clinical program based on a request from the Food and Drug Administration for more pharmacokinetic and safety data in children. The FDA acknowledges that we have identified a range of doses that are relatively well tolerated short term. It has now requested additional pharmacokinetic and safety data in children with achondroplasia before proceeding to extended dosing in children. The FDA has placed the program on partial clinical hold. We will work with the appropriate health authorities on the implications for the program. We anticipate that we will initiate the clinical study in patients with achondroplasia in Q4 '13 or Q1 '14. Despite this minor delay, we are very much committed to this program and eager to proceed to the next phase of development.

As for the remainder of our pipeline, all programs are advancing to the next stage of development and generating value for the Company. We initiated a Phase 3 PEG-PAL trial for phenylketonuria in the second quarter. Enrollment is progressing well and we expect to report top line data in the fourth quarter 2014. We plan to initiate the Phase 1-2 trial for BMN 190 for Batten Disease in the current quarter, and the Phase 2-3 trial for BMN 701 for Pompe Disease in the fourth quarter of this year.

The meeting with regulatory authorities on the planned end points of maximum Inspiratory and Expiratory pressure will occur in the coming months. If completed a full scale production campaign using our new higher producing cell line and process. We have verified the expected five-fold higher production yields. Characterization testing is currently ongoing and it is expected that regulatory filings to support the introduction of this material into clinical studies will be submitted in the fourth quarter of 2013. We are planning our next Research and Development Day for September 17 in New York. Please note that this date is subject to change based on Vimizim regulatory meeting dates which are yet to be determined.

With that, Operator, we would now like to open the call for questions.

(Operator Instructions)

Chris Raymond, Robert W Baird.

Thank you for taking the question. Hank, I wonder if you can provide a little bit more color on FDA 's reason for the partial clinical hold for 111. Was there something that they saw that was new? Was there just a change of direction or change of mindset by the agency? Any more color you can provide would be great.

Hi, Chris. I am pleased to take your call first. As far as the FDA's reasoning, we have not had an opportunity to meet with them. We've gone back over the notes of the meetings that we've had in quite a bit of detail. We covered this topic with them at a pre-IND meeting at which time they verified that if the data from the healthy volunteer study indicated safety, that it would be okay to proceed to a repeat dose, extended dose study in achondroplastic children. In the present communication they indicate that we have identified that safe dose and they've made their request for additional PK and safety data in achondroplastic children.

I can't say that I know for such a list of what's on their mind and that's why I look forward to meeting with them and with ex-US health authorities to discuss the program at which time we'll have a lot better clarity about the steps to take forward. I think it's important to recognize that what I am saying here is that there isn't a new issue or a problem with the achondroplasia program. It's just that we're working through an interaction with the US health authority to determine the next steps of the program.

So this is data that you will need to generate, correct?

Well that's what we want to understand in our interactions with both the US health authority, as well as ex-US health authorities.

Okay. Thanks.

Cory Kasimov, JPMorgan.

I wanted to ask about 673. The two new unconfirmed partial responses that you're reporting today, were those patients that were previously among the four with stable disease as of your ASCO presentation? I am wondering whether those stable disease patients are indeed turning into responders. Thanks.

We have four ongoing now so I don't know the full -- I can't, I don't have it in my fingerprints, Cory, the full accounting. What I can tell you is we have nine ongoing partial responses, including one complete, seven of which have confirmed, two of which are awaiting confirmation and there are four ongoing patients who are headed in the right direction I should add. And so we are presently sitting at 50% and the study is continuing. I hope that's helpful.

Navdeep Singh, Goldman Sachs.

Thanks for taking my question. I just want to gauge your confidence on how comfortable you are that the FDA will remove the partial clinical hold on the achondroplasia program and then I have a quick follow up.

Well, as I said, we have the minutes which I've basically gone through with you from their interactions. It doesn't give any more insight precisely than what I've given you just now. And the mechanism for interacting with them is to have a meeting and there is some time that's required to take that meeting and I won't know more until we have that meeting. So unfortunately I can't give you more insight about that. What I can tell you is that we have made plans all along to conduct the study globally and we'll also be very transparent with health authorities outside the United States, of course. But we don't know that health authorities outside the United States have the same recommendation for additional safety and PK data in children before proceeding to extended dosing. So the best I can offer at this point is stay tuned. We believe that we can start back into patients in the fourth quarter or shortly thereafter, and we'll know more after we've interacted with health authorities.

If I may add, there is no new data or new information that would have resulted in the FDA changing their mind here, none. And also it's not they don't want us moving patients, pediatric patients. Remember this is a drug for children. I think it's just that they want us to go a bit more slowly and do something to develop pharmacokinetic dynamics in children before, as Hank said, we move to longer term therapy in children. They have no issues with us doing the next step in achondroplasia patients.

Okay. And as a quick follow up, any updates on discussions with FDA or EMEA on MIP as primary end point for the switching study for BMN 701? Thanks.

We're just undertaking those now. I think we indicated that the regulatory would be in two phases. The first phase would be to discuss our plans for introducing the new process material. The second phase would be the clinical interactions around the support of the registration enabling trial. We are feeling good about the requirements for bridging and are on schedule on that basis to begin the trial at the end of the year, but we are not to a point of talking about health authority feedback on the primary end point of the registration enabling program and we'll keep you posted as that unfolds.

Joseph Schwartz, Leerink Swann.

I wanted to actually follow up on BMN 701 and make sure I understand your logistics exactly regarding the new cell line material. Since I think in the press release you said that you would introduce this material into clinical studies in the fourth quarter. So are you planning on only using the new material in the trial and no bridging of any sort?

Yes, that's right, Joe. So the bridging that I referenced in my previous answer would be pre-clinical toxicology testing of a relatively concise sort that would support the introduction of what amounts to the to be commercialized product process in the pivotal trial from the beginning. Again, remember our strategy all along has been that we want to avoid major changes in the production of the product, either during or after the Phase 3 trial. That, as you know, has been tried before and can be very complicated, especially in this setting. The goal all along has been to introduce the to be commercialized product in the Phase 3 clinical trial and use it and only it through that trial and we are on track for that plan.

BMN 111 showed some acute blood pressure effects in the Phase 1 studies for adults, if I recall. Wouldn't it be logical to think that, that might be something the FDA might be focused on? If so, do you think they might just be wanting to ensure that it's no greater in kids?

It's a reasonable speculation. As I said, what they said to us was you have identified a safe dose. I think as JJ said, I think a reasonable interpretation is they just want us to go slow in pediatric patients. The important emphasis point is there is no barrier to going into pediatric achondroplastic patients and as to the specifics of how to proceed next in the United States, that awaits further conversation with them.

Great. Thanks very much.

Matthew Harrison, UBS.

Good afternoon. Thanks for taking the question. I wanted to ask about the PARP and your potential and has you have been studying that you are looking some other people. Obviously Roche has recently filed for their neo adjuvant indications. Some other people are potentially looking at accelerated approval there. I wonder if you could maybe comment on what kind of study you might be thinking about and if we could think about accelerated approval as a potential study there. The other question is what's the comparator or what do we know about BRCA patients in the neo adjuvant setting? Thanks.

Yes. Well as you might know, [Dr. Pasture] has written a piece in the New England Journal of Medicine making a call for companies to place more emphasis on approaches to the neo adjuvant treatment of breast cancer in the spirit of trying to keep the cancer confined to the breast. As you know, breast cancer doesn't kill if it stays in the breast. It only is a killer when it travels outside of the breast. That was his medical and scientific motivation and his platform was the New England Journal of Medicine. He has since held a couple of round table conferences in which he has indicated that the FDA would consider registration accelerated approval on the basis of an end point that could be relatively readily obtained, called the pathological complete response rate. And I think in the main, the world has been thinking about that as an add-on kind of design approach.

What's been interesting about our development of 673 and the communications that we've had with both the FDA and the European Medicine Agency is that they see the tremendous opportunity that targeting with an oral and relatively well tolerated drug represents for a segment of the population where we could be viewed as an alternative to chemotherapy. Without having had the conversate, without having designed the program and without having had the conversation with health authorities, our anticipation is that we could envision this as a trial in which 673 is evaluated as mono therapy as an alternative to chemotherapy. Whether that needs a control arm, what the expected BRCA response rate chemotherapy is I think is yet to be fully flushed out. But the key messages I think are the tremendous response activity that we're seeing in late lying patients, the great and uniform reception that we're getting from health authorities about 673 as a well tolerated alternative to chemotherapy as a single agent, and opinion leader mounting enthusiasm for moving 673 into an even earlier setting points to the opportunity to make an even greater medical impact with 673 than we were planning, even as recently as several months ago.

Anything you can say about what we should think about more information around timing or how we should think about when you can start such a study?

No. Beyond the initial focus right now is the Phase 3 clinical trial and launching it. As I said, we are moving that up a quarter. I think the health authority conversations went great. The physician investigator enthusiasm for the program has been great. There are a number of clinical trial sites that are moving heaven and Earth. They're in basically a race with each other to be the first on the press release announcing the start of the 673 program.

National Breast Cancer Coalition has a strong initiative and interest in participating in the research process. They're very selective about what projects they'll work on and we really appreciate the fact that there are about 3,000 research trained advocates all over the world prepared to facilitate the investigation of potentially break through therapies in cancer. And so that's keeping us pretty busy. We'll work on the design of the neo adjuvant program as quickly as we can.

We will probably provide you with an update on the R&D day in September.

Thanks.

Salveen Richter, Canaccord.

Hi. This is Andrew on the line for Salveen. My question is also on 673 and the other indications. If you can give us any kind of sense of how those are enrolling and if we're going to get that data at the R&D day or at ESMO or San Antonio? Thanks.

Yes, they are enrolling. They are enrolling in Ewings and small cell. I don't have an update for you today, nor do I have a timetable to set in terms of when to expect an initial report of activity. What I mentioned on the call was relevant medical conferences could be ESMO, could be San Antonio. More specific than that, I can't give you right now.

Thank you.

Eun Yang, Barclays.

Thanks for taking my questions as well. First of all, I want to drill down a little bit on the BMN 673 data here. Hank, can you remind us what is the response rate from the patients who are actually treated at one minute round dose, which is a dose you guys have taken forward for Phase 3 here?

I don't have that break down right at the tip of my tongue. As you know, we treated I think it's 12 of the 18 patients at the expansion dose cohort. That's where the preponderance of data are. I just can't give you a further break down.

Then I have a follow up on BMN 111 here. In Phase 1 healthy adult trial, have you seen anything that the LT dose limiting talks or anything that could be suspicious?

Sorry for BMN 111?

Yes, in the healthy adult volunteers in Phase 1. What kind of side effects have you observed?

So what we've observed is generally asymptomatic orthostatic hypotension. We have identified doses below which that doesn't occur. Those are expected pharmacologic effects of BMN 111. We haven't seen any side effects that are not cardiovascular related and as I said, the FDA in their letter to us agree that we have identified a safe and well tolerated dose. So that's all information that we've already reported essentially.

Hank, was that dose dependent in Phase 1?

Yes. For doses above which you observed mild generally asymptomatic orthostatic hypotension and then there were doses below which you did not observe it.

Got it. Thank you very much.

Yaron Werber, Citi.

I have a question about Battens disease. I am just curious. It is a broader question a little bit about orphan drug passed to market. There is one other company in the space, not competing with you, but is talking about potentially getting the FDA to agree on a surrogate marker by which they can get approved to the market very quickly. It's sort of -- it's a part of the new FDA so to speak. I am just kind of wondering. I'm not going to comment. The question is, is there a vendor by which FDA will accept, let's say, a situation where you give an enzyme and you lower the metabolite in a very well known biochemical reaction in the body. There is no questionably going to be due to the enzyme that you are giving, is that going to be acceptable in anyway as a surrogate marker without having clinical data?

Hard to comment in the context of our 190 program because there isn't a similar biological marker. Well the substrate of PP1 is not precisely identified. What I would say about PP1 is that the health authorities that we've interacted with in general have been unbelievably receptive to expediting development of BMN 190 for Battens disease and in lieu of clinical data, I could see a pathway where in they accept radiographic evidence of improvement or preservation of brain function. That's a little different than a well described biochemical marker in the pathway but it is, I think, indicative of when surrogates are reasonably likely to predict severe clinical outcomes and serious diseases, health authorities around the world have been pretty fast in mobilizing approvals. I think Battens disease is an excellent example of when that might be expected.

So past the market could be what, a Phase 1-2 dose escalation that rolls into a treatment phase with the potential of some kind of an MRI end point?

We call that a Phase 1, 2, 3 study.

Thank you.

Tim Lugo, William Blair.

For 673 you mentioned both agencies signed off on PFS as an end point. Were there any discrepancies in maybe what either agency was looking for in terms of magnitude of benefit in PFS?

Hi, Tim. No.

Hi.

No, both agencies do the computation and they both note that essentially we're making the assumption that the safety profile of PARP inhibitors is substantially different than the safety profile of chemotherapeutic agents in common use. I think that if that assumption holds true, then it's not unreasonable to expect that plain old superiority without much consideration of the magnitude of that superiority will carry the day. I'm very confident that a large fraction of clinicians given the choice in patients, given the choice between a more effective oral PARP inhibitor that is safer than a chemotherapeutic will not be asking how much more effective before they make their decision to take the oral, well tolerated PARP inhibitor.

That makes sense. Can you confirm the blinding of the trial?

Going to be done through independent radiologic review of the primary end point which is standard in all regions of the world. This is not an uncommon -- this is a very common element of comparative clinical trials and oncology medicine today. The methodology for independent facility review is well described and well accepted, and we are going to just do what everybody else has been doing in that regard.

Thank you.

Brian Abrahams, Wells Fargo.

Hi. This is [Shen] calling in for Brian. If the FDA agrees to the MEPINP end point for 701, do you plan or do you expect to be required to include the six minute walk test as a secondary end point to support the primary end point? How important do you think it would be for the study to hit on the six minute walk test point as a secondary end point?

Well first of all, that discussion hasn't happened yet so it's a little difficult to speculate on what they might or might not say. I would remind you that from a design perspective, we're going to take patients who are stable on Myozyme or Lumazyme and then switch them to 673. Our expectation is that there will be essentially zero change on six minute walk test because we don't believe that improving delivery of the enzyme for the muscle is actually what limits the ability to improve the six minute walk test. Rather, our belief is that where improved delivery matters is in respiratory muscle strength and what our expectation is, is that the improvement in respiratory muscle strength will show up as an improvement in those tests.

So the conversation with Food and Drug Administration is going to be not so much around what can you do just as good in? It's going to be around isn't it desirable to offer patients an alternative to an existing therapy that offers you a better outcome in a dimension that ultimately causes your demise, day to day causes a substantial amount of disability which is incompletely satisfied with current therapy, which is why your pressures are stable on Myozyme and Lumazyme and which can get better with the new drug, and can get better to a degree that makes people feel and function better. And I think that conversation -- that's just the kind of thing that health authorities want to see when it comes to new drug development and what I am hopeful of is that the conversation gets into the, how do you dot your I's and cross your T's without showing that?

Thanks.

Michael Yee, RBC Capital Markets.

Hi. This is Charmaine in for Michael. My question is on the NPP application that you put in for France and Italy. When do you expect to hear an update relative to the CHMP discussion? And secondly if I may, can you speak to the concordance of pricing for orphan drugs in Europe for an indication like yours? Thank you.

Hi. This is Jeff. I'll take that one. So our application for ATU and 648 early access program in France and Italy respectively went in, in June. We expect to get a response back from both of those markets in the early fourth quarter and anticipating a positive response, we could be treating patients and recording initial revenues in either or both of those markets in the fourth quarter. So I think that the fact with respect to timing we have the application filed in the EU allows us to file each in France and Italy. So I don't think that there is a direct correlation now with the registration timing going forward.

In terms of pricing of these types of products in the EU, there is well established pricing for products in the EU. We have given guidance that we expect Vimizim to be priced in the range between Aldurazyme and Naglazyme. More recently we've guided that we think that Vimizim pricing will be in the higher end of that range, probably closer to Naglazyme than to Aldurazyme. I'm wondering if there is anything additional on pricing that I am missing for you here.

No. It's just that with NPP you will probably have had a price in France and Italy and most companies usually start with German pricing, so just the difference there and how that would translate.

Good question.

Right.

So each of those prices, if approved, will not constitute a formal and referenceable price for the discussions that we will have with pricing authorities following registration. However, either or both of them will be a price in fact and if not official, we think it will be a relevant comparator for when we submit our pricing applications. So you won't be surprised to hear that we're very interested in obtaining a price that we think will be in line with what we want to commercially price this product at post registration.

Great. Thank you.

Kim Lee, Janney Capital.

Good afternoon. Just a quick one. Can you go over exactly what you think the design for BMN 673, the Phase 3 design would look like besides the primary end point of PFS that you've already stated? How many patients do you think you'll need in the study and what could be the possible secondary end points? Thanks.

The design of the pivotal registration enabling trial, obviously to be finalized now that we've included our health authority interaction with the clinicaltrials.gov soon to get it exactly but a thumbnail of it is it's a randomized control trial. The sample size is approximately 430 paid women will be -- patients will be randomized two to one to receive either BMN 673 or a physicians choice of chemotherapy consisting of Gemcitabine, Vinorelbine, Eribulin and Capecitabine. Patients will be eligible if they've had no more than two prior cycles of chemotherapy in the metastatic setting. We will work hard to try to get as many patients who are being treated for the very first time in the metastatic setting.

Patients will have had to have had a prior anthracycline or taxane containing regiment, presumably that will have occurred in the adjuvant setting. As you mention, PFS was the primary end point. Secondary end points will include objective response rate and overall survival. Additionally, we'll look at patient well being as reported by standard well being battery questionnaire.

Great. Thanks.

Lee Kalowski, Credit Suisse.

Thanks. Appreciate that. Maybe a bigger picture R&D question for you, Hank. As I look at the listed upcoming milestones through the next data release that you've listed is Q4 '14 for PEG-PAL. I understand we'll have some 673 data at San Antonio or maybe ESMO. Is there anything else we should be looking at or should be thinking about as far as potential data releases between now and Q4 '14, whether it's anything from 111 if things go well with that progressing or 190 or anything else we should be thinking about before that?

Well I think in our release we detailed the upcoming milestones. I think those are the ones that we pulled out in terms of where we expect major new clinical data. But obviously the number one, two, and three value creating milestone on the radar screen between now and then end of '14 is going to be the Vimizim regulatory actions on a worldwide basis. I think the R&D engine of the Company has been very much focused on getting that thing across the finish line. As I said in my prepared comments, we are working very closely, very hard first and foremost with health authorities around the world. We have our US application underway. We have our European application underway. We submitted in Brazil. We have an aggressive schedule this year and rolling into next year for applications worldwide. I'd say the continuing current data updates on how that's going are going to be the real R&D driving updates between now and '14.

Okay. So most likely not for anything on 111 or 190 or other sort of more modest updates?

Well 111 at this point, as I said, it's going to be the start of the clinical trial and finalizing the design. I think your question was in the data frame. 190 is going to be the start of the trial. It depends in terms of how fast that goes. By the way, interest in the Battens disease trial, amongst the Battens disease community, is phenomenal. We have pre-identified almost the entire cohort to enroll. That will be more start up study kinds of thing.

That's great. Appreciate the color. Thank you.

Josh Schimmer, Lazard Capital Markets.

Just a quick question on BMN 111, what was the rationale in the first place for not having done PK, PD or safety studies in kids before going into that population? In retrospect, is that something obvious that should have been considered?

Well it wasn't that we were not going do PK, PD in kids in the first place. The strategy and, again we discussed this pretty extensively with US health authorities, was to do very detailed assessment in adults and then move to more abbreviated assessments in achondroplastic children as part of an efficacy study. And what they've asked us to do is provide more PK data than what was in the protocol that we had originally agreed to them with. The strategy was that we had discussed with them initially was how to expedite getting to the real definitive read out because they expected sort of pharmacological effect on the cardiovascular system can only be judged in terms of what risk it presents in the context of what impacts this has on normalization of the dysmorphic syndrome. All of that was discussed in advance.

As I said before, what is different between then and now awaits our more detailed discussion with them because the FDA's report back to us is we asked you to do this. You did this. We found a safe dose. And although we had agreed to progressing with this second study, we now want you to do a different second study. We just have to meet with them and find out what's on the (Inaudible) greater detail and we have to meet with ex- US health authorities and be transparent with them on the one hand but on the other hand, review with them what the original plan was and why we still think that's an appropriate plan.

Have they asked for, specifically at this point, any other modification other than taking what you are going do as part of it and doing it independently now ahead of the rest of that multi-dose trial? Or, they haven't specified that?

It's only been worded as additional safety and pharmacokinetic data of a short term in children before proceeding to the longer term study.

Okay. Thank you.

Nicholas Bishop, Cowen & Company.

Hi. Good evening, just a quick one on 673. Can you comment on the number of the responding patients that remain in response and maybe any quantification of median duration of response?

I can't actually. I don't have that data suite. What I'd say is having anticipated this question is, it remains too early. That is to say there are a lot of patients that are still ongoing with treatment to quantify duration of response or PFS. Still ongoing.

Okay. Thanks.

So that's actually not new compared to ASCO, other than it's two months later. What is new compared to ASCO is that our response rate is now at the 50% number, with two to be confirmed. We're really excited about that.

Right but at ASCO a couple of the patients had responded and progressed already so I am just wondering were there any more patients that responded have subsequently progressed?

That's the interesting thing. There were three -- at ASCO, of the seven that had either been confirmed or were awaiting confirmation, we were three for three. Those first two who responded and didn't confirm are now the minority of the response happenings. At ASCO we didn't know whether that was going to be the rule or the exception. Right now it's looking like the exception. Not an uncommon finding or expectation I should mention. Those occur during the dose escalation phase. I am sure you can imagine that in the dose escalation Phase 1 trials are difficult trials to do and, therefore, often recruit the sickest and most eager to get experimental therapy patients. So it's fairly common for the response outcomes of the early escalation portion of a trial to include patients who are very advanced stage and very aggressive stage of disease.

And actually, if you think about it, where we are really is that we have these nine responders, again seven of which are confirmed, two are waiting, we really have 11 total responders including the two patients who had far advanced disease. I think that's actually an important point as it comes to the neo adjuvant setting. In the neo adjuvant setting you are not going to be treating patients, or in the early metastatic setting, with nearly as much advanced disease. One could make a decent argument that as impressive as 9 out of 18 is, that 11 out of 18 is not only more impressive but potentially even more relevant to what is going to happen in earlier lying patients. We have been relatively conservative to report the confirmed and ongoing numbers. But you are right to point out that there have been responders of shorter duration, but those responders are patients of much more advanced disease.

Great. That's very helpful. Thanks.

Chris Raymond, Robert W Baird.

Hi. Thanks for allowing me to ask the follow up question. Another one on 673 and more of a strategic question. You guys have talked in the past about a variety of options to commercialize this molecule, including potentially partnering it or doing something else. Especially now with the neo adjuvant opportunity, this appears, even though it's still orphan, to be even a bigger population more of a mainstream oncology product. Can you maybe update your thoughts and where things stand on your decision making there? Thank you.

Hi, Chris. It's JJ here. That's a good question. Neo adjuvant, I think I'd say we're talking about 15,000 to 18,000 patients in the US. That's almost ultra orphan so that is definitely that's something we can do. But we do believe that 673 can actually potentially be effective in naming all the trimmers and that's where -- and also in combination therapy. I would say this is where the partnering questions becomes a bit more relevant. I would say in BRCA Breast, whether it is whatever lies in therapy or whether it's neo adjuvant or further down the road, we believe we can definitely drive the development of the product there and likely commercialize it in the US. I mean ex-US. Definitely US is a very relevant question. I would say it is unlikely we are going to be an oncology organization, commercial organization in Asia Pacific. So we just are thinking about it right now but there is absolutely no urgency for us to do that.

Good problem to have.

It's a good problem to have.

At this time I would through turn the call over to Mr. Bienaime for any closing remarks.

In summary, I think we are pleased with the steady growth of our commercial portfolio of products and the advancement of our pipeline, which is resulting in significant value generation for the Company and it's shareholders. PEG-PAL Phase 3 trial is progressing well and we will initiate Phase 3 trial for 701 and our PARP inhibitor by the end of the year, actually hopefully this quarter for 673. We are looking forward to possible FDA approval and European approval of -- by this time next year, which will be a transformative event for the Company with the potential to double the revenues of BioMarin and bring us to the next stage of growth and maturity. Thank you for your continued support and for joining us on today's call. Bye.

Thank you, sir, and thank you, ladies and gentlemen, for your participation. That does conclude your program. You may disconnect your lines at this time. Have a great day.